“ Energy Transition and Climate action” The pillars of the Union Budget 2022

                         “ Energy Transition and Climate action”

The  pillars of the Union Budget 2022  

The four pillars of the union budget 2022 are Inclusive development, productivity enhancement, energy transition and climate action

When the “Energy transition” and "Climate action” become two of four pillars of the Budget speech, it sends a strong signal of the government's intent to drive economic growth and employment through sunrise sectors focused on sustainability. 

The Finance Minister announced  that the government would promote cleaner technologies such as solar energy, sustainable mobility and sustainable agriculture.

The Panchamrit Vision laid out by Mr Narendra Modi at Glasgow has set ambitious targets to meet half of country’s energy requirements from renewable energy by 2030 by taking its non-fossil energy capacity to 500 GW by 2030, reducing the total projected carbon emissions by one billion tonnes from now till 2030, reducing the carbon intensity of economy by less than 45 percent and achieving the target of Net Zero by 2070. 

"The Union budget 2022 proposal to issue sovereign green bonds has several benefits, principal among which is signalling the country's seriousness in pursuing climate action. India will now join a select group of countries, primarily European, which have issued such bonds. We can also expect this move to catalyse the development of the domestic corporate green bond market. Green bond issuances by Indian companies in the domestic debt capital markets have considerably lagged overseas issuance so far. If sovereign green bonds price at lower yields versus their non-green counterparts, it will also provide an added signal for the private sector to direct their own capital towards green investments. This important move also ties in with the capital expenditure push.The decision to issue sovereign green bonds and use them for public sector infrastructure projects would also help private players tap into a deeper green bond market. India could aspire to become a hub of sustainability financing by offering climate finance services.

The enhanced outlay for the PLI scheme to increase local manufacturing of solar cells and modules should encourage investors.  "While India has been highly dependent on imports to meet the requirements of solar modules, the announcement of an additional INR 19,500 crores (total 24,000 crores) for high-efficiency solar module manufacturing will encourage many existing and potential manufacturers to set up integrated manufacturing in India. This PLI scheme, along with basic customs duty on solar modules and extension of concessional tax regime (15%) for manufacturing (until March 2024), could be the key catalyst for India to become a global manufacturing and R&D hub for solar modules and associated products. 

A separate policy for EV battery swapping and interoperability and the creation of separate zones for EVs are signs that India is keen to create a domestic market for zero-emission vehicles. "Limited charging infrastructure has been a key challenge to scale up electric mobility. This announcement in the Budget could lead to increased user confidence and encourage many to buy electric vehicles. 

Co-firing of biomass pellets in coal power plants would reduce emissions and could curb stubble burning. The budget also reaffirms the government's claim to reduce the carbon intensity of the economy by 2030.

Karnataka State budget 2022 also made an effort to address the climate change actions and compliment the PM’s vision.  Karnataka is blessed with abundant renewable energy resources of all forms including Solar, Wind, Small Hydro, Biomass, Cogeneration, Waste-to-Energy. The Union government target to achieve Green energy for the karnataka state is 17.85% of the state consumptions. But Karnataka exceed the obligation and generates 39.9 %  and emerged as a leader in clean energy mission as it has produced the largest quantity of Green energy. Appreciate the intent of the Karnataka state budget 2022  by focusing further too. It is proposed to implement 2000 MW capacity under ground storage centre in the sharavathy basin at an estimated cost of Rs 5391 Cr. Taken an initiative to implement PM- KUSUMA component -B scheme by establishing 10,000 solar based irrigation pump-sets, formulate a Green Hydrogen policy in collaboration with the centre National Green Hydrogen Mission. Budget also proposed the 5000MW capacity hybrid renewable energy park. 

Though the union budget stressed on the climate change and energy transition, The total allocation of five autonomous bodies under the Union Ministry of Environment, Forest and Climate Change (MoEF&CC) — GB Pant Himalayan Institute of Environment and Development, Indian Council of Forestry Research and Education, Indian Institute of Forest Management, Indian Plywood Industry Research Institute and Training Institute and Wildlife Institute of India — is Rs 287.45 crore, which is less than last year’s budget by Rs 18.05 crore. Budget allocation for the six statutory and regulatory bodies related to environment and wildlife — the Central Pollution Control Board, the Central Zoo Authority, the Animal Welfare Board, the National Biodiversity Authority, the National Tiger Conservation Authority and the Commission for Air Quality Management — has been reduced by Rs six crore.  Budget 2020-21 Budget Expenditure (BE) was Rs 5,646 crore for the Ministry of New Renewable Energy(MNRE)  but the revised expenditure was a mere Rs 3,343 crore

India had asked for $100 billion-1 trillion for the Climate Fund to help poor countries at CoP26. But in the present budget, only Rs 30 crore has been allocated for its Climate Action Plan, which is a very meagre amount for controlling any kind of natural calamity.

The Union budget would have made a provision to create a fund to insure against climate risks. In addition to this the full public spending in the budget should be climate centric and should focus on  the future budgets as Climate budget

The author is Ramesh Shivanna, Pride Energy Environment Resource  Research Institute (PEERRI), Director - Sadbhavana ventures pvt Ltd., Director - FKCCI . ramesh@prideworld.in